ORDER
Ashok B. Hinchigeri, J.
1. The subject-matter of this petition is the corporation of the retail sector by bringing Foreign Direct Investment ('FDI' for short). The cause of the retail traders is espoused in this petition. The petitioners' grievance is that if the foreign companies are permitted to enter into the field of retail trade, the business of retail traders in India would be affected adversely; it results in the deprivation of their solitary source of livelihood.
2. The second respondent is a wholly owned subsidiary of Metro AG, a German Multinational Company, the World's fourth largest retailer. It has established two 'State of the Art' Cash and Carry stores in Bangalore at Yeshwanthpur and on Kanakapura Road. The first respondent accorded the approval to the second respondent, to carry on Cash and Carry wholesale business in India, subject to certain terms and conditions. The material condition at Sl. No. 6 in the approval order, dated 5th December, 2000 (Annexure-B to the writ petition), reads as follows:
6. The approval is subject to the condition that the company would need to ensure that the selling of the products stocked by it to retailers who would possess sales tax registration and not to consumers.
3. The inclusion of the aforesaid condition is only to ensure that the second respondent would not resort to retail trading. It is not supposed to sell any commodities to the end consumers. It is the petitioners' case that the second respondent, though obtained permission to do wholesale business, has obtained retail licence to deal in over the counter pharmaceutical drugs and the retail licence for the sale of IML Liquor. It is also doing the business of selling spectacles, jewelry, audio, visual and compact discs, etc. The petitioners have referred to the statement of second respondent's Managing Director that the price would be the same whether a person buys 100 units or one unit, thereby indicating that the second respondent would indulge in retail business by selling even a single unit. Such manifest statements and activities do not lend credence to the claim of second respondent to be doing only wholesale trading. The petitioners have also complained of the distribution of two lakhs membership cards of the respondent 2 in Bangalore; the cardholders include Architects, Interior Designers, Finance Companies, who cannot be construed as retailers by any stretch of imagination. The petitioners have also given illustration that a registered retail trader dealing in garments may purchase the television sets, although he is not dealing in television sets. The mere production of the sales tax registration number would not convert a retail sale into a wholesale sale.
4. It is the further case of the petitioners that the respondent 2, apart from indulging in retail trading would also indulge in price war to attract the general consumers. As the petitioners would be in no position to compete with the prices offered by the respondent 2, they would only be forced to close down their business. All over the country the retail traders and their associations have been protesting against the grant of permission by the first respondent to the second respondent.
5. Aggrieved by the granting of the approval to the second respondent to carry on cash and carry wholesale trading business within India but not stipulating any guidelines or checks or control mechanisms in the approval letter for preventing the second respondent from indulging in retail trading activities, this petition is instituted.
(i) Sri R.N. Narasimhamurthy, the learner Senior Counsel appearing for M/s. AAKEN Associates for the petitioners urged the following contentions:
(i) The blanket permission, without any riders for the purpose of preventing the respondent 1 from entering the retail sector, runs in sharp contrast to the industrial policy formulated by the first respondent itself;
(ii) The impugned permission is violative of Article 21 to the Constitution of India. As the small-timers are being deprived of their only source of livelihood, the impugned permission is violating the fundamental right guaranteed under Article 21 to the Constitution of India;
(iii) The term 'wholesale' used in Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Second Amendment) Regulations, 2003, is to be understood in the sense in which it is defined in Indian Statutes and the rules framed thereunder, relating to trade, such as the definitions contained in the Monopolies and Restrictive Trade Practices Act, 1969, Standards of Weights and Measures (Packaged Commodities) Rules, 1977, etc. While bringing out the distinction between 'wholesaler' and 'retailer', he relied on the following.-
------------------------------------------------------------------------------------------Sl. Definition of Definition of SourceNo. retailer/retail wholesaler/wholesalesales/retail dealer dealer, cash and carry, etc.------------------------------------------------------------------------------------------1. Section 2(p) of the Section 2(x) of the MRTP As perMRTP Act, 1969 Act, 1969 'Wholesaler' in Monopolies and'Retailer' in relation to relation to the sale of any Restrictive Tradethe sale of any goods, goods, means a person who Practices (MRTP)includes every person, sells the goods, either in Act, 1969other than a wholesaler, bulk or in large quantities,who sells the goods to to any person for theany other person, and in purpose of resale, whetherrespect of the sale of in bulk or in the same orgoods by a wholesaler, to smaller quantitiesany person, for anypurpose other thanresale, includes thatwholesaler-----------------------------------------------------------------------------------2. Rule 2(o) of Standard of Rule 2(w) of Standards of The Standards ofWeights and Measures Weights and Measures Weights and(Packaged Commodities) (Packaged Commodities) Measures LawRules, 1977 'Retail Rules, 1977 'Wholesale Manualdealer' in relation to any dealer' in relation to anycommodity in packaged commodity in packagedform means a dealer form means a dealer whowho directly sells such does not directly sell suchpackages to the commodity to any consumerconsumer and includes, but distributes or sells suchin relation to such commodity through one orpackages as are sold more intermediaries.directly to the consumer,a wholesale dealer whomakes such direct sale.-----------------------------------------------------------------------------------3. x x x x x x x x x x x x-----------------------------------------------------------------------------------4. 'Retail package' means 'Whole package' means a The Standards ofa package containing package containing.- Weights andany commodity which is Measuresproduced, distributed, (i) a number of retail (Packageddisplayed, delivered or packages, where such first Commodities)stored for sale through mentioned package is Rules, 1977, Ruleretail sales agencies or intended for sale, 2(p) and 2(x)other instrumentalities distribution or delivery to afor consumption by an intermediary and is notindividuals or a group of intended for sale direct to aindividuals single consumer;(ii) a commodity sold to anintermediary in bulk toenable such intermediary tosell, distribute or deliversuch commodity to theconsumer in smallerquantities;(iii) packages containingten or more than ten retailpackages provided that theretail packages are labelledas required under the rules-----------------------------------------------------------------------------------5. Defines 'Wholesale dealer' The Law Lexicon,as a trader who stores bags 2nd Edition, 2002and sells grain by the bulkwithout breaking the bagsis a wholesale dealer'Wholesale dealer' is aperson who keeps forwholesale to traders acommodity for the purposesof trade-----------------------------------------------------------------------------------6. Defines 'Retail' as the Defines 'wholesale' as sale The Law Lexicon,sale of goods in small in large quantities; where a 2nd Edition, 2002quantities to ultimate trader sells the whole or aconsumers large part of his producedirect, at fixed price tocustomers, that price alsocan be described as the'wholesale price'-----------------------------------------------------------------------------------7. Defines 'Retail sale' is The Law Lexicon,to sell goods in small 2nd Edition, 2002parcels and not in grossIf a person takes ahouse, or part of ahouse, either in his ownname or in the name ofany other person, andthen, either personallyor by his agent, makessale of spirits by retail,he carries on businessthere as a retailer ofspirits, notwithstandinghe keeps no spiritsthere, and the spiritswhich he sells there arekept in and deliveredfrom a store in anothertown where he carrieson the business of awine and spirit merchant-----------------------------------------------------------------------------------8. Defines 'Retail' as the Oxford Dictionary defines Oxford Dictionarysale of goods to the 'Wholesale' as the sellingpublic for use or of goods in large quantitiesconsumption rather to be retailed by othersthan for resale-----------------------------------------------------------------------------------9. Defines 'Retailer' as a Defines 'Wholesaler' as a Oxforddistributor that sells distributor that sells goods Dictionary ofgoods, or services to in large quantities, usually businessconsumers (compare to other distributor.wholesaler). There are Typically, a wholesalerbroadly three categories buys and stores largeof retailer; multiple quantities of severalshops, co-operative producers' goods andretailers and breaks into the bulkindependent retailer deliveries to supplyretailers with smalleramounts assembled andsorted to order-----------------------------------------------------------------------------------10. Defines 'Wholesaler' as Hyper Dictionarysomeone who buys large and Word net (r)quantities of goods and 1.7resells to merchants ratherthan to the ultimatecustomers-----------------------------------------------------------------------------------11. Defines 'Wholesaler' as an Dictionary ofEnterprise which makes its purchasing andprofits through buying supply --supplies in bulk at Trade Terminology forprices and sells and buying anddistributes them to retail selling - H.K.business and industrial Compton andenterprises on trade terms. D.A. JessopOriginally a wholesaler was (Tudorso designed as a middleman Publication)who sold 'wholesale pieces'of materials and goods toretail customer's viashop-keepers-----------------------------------------------------------------------------------12. Defines 'Cash and carry' as Dictionary ofbuyer pays cash and purchasing andcollects, loads and carries supply --away the goods he has Terminology forpurchased. More usually buying andapplicable to the domestic selling -- H.K.market Compton and D.A.Jessop (TudorPublication)-----------------------------------------------------------------------------------13. Defines 'Retailer' as a Defines 'Wholesaler-' as a The Marketingmiddleman company company serving as the Glossary-Keythat purchases goods middleman between a Terms, Conceptsfrom a manufacturer or manufacturer and a and Applicationswholesaler for resale to retailer. A wholesaler buys inthe goods' ultimate goods from the Marketingconsumption at a profit. manufacturer for resale (at Management/Retailers usually sell a profit) to retailers and, Advertising/merchandise for occasionally, directly to Directpersonal and household consumers. There are two Marketing/Salesconsumption, with the basic types of wholesalers: Promotion/merchandise both stored Marketand displayed on the (1) Full-service wholesalers Research/Publicstore's premises provide services such a Relations/Sales-carrying stock, maintaining Mark N. ClementStore retailers are the sales forces, and offering (Americanoperators of department management and credit Managementstores, super- assistance to buyers; and Associationmarkets, clothing Publication)boutiques and so on (2) Limited servicewholesaler's offer some, butnot all of the servicesrendered by full-servicewholesalersNon-store retailersinclude companies thatsell through mail ordercatalogs, engage indirect selling (e.g.House-to house) oroperate vendingmachines-----------------------------------------------------------------------------------14. Defines 'Retailing' as Defines 'Wholesaling as the The Marketingthe practice of making process of buying Glossary-Keygoods available to merchandise in large Terms, Conceptsconsumers for their quantities from a and Applicationspersonal use in a manufacturer for resale to in Marketinglocation or situation that retailers or business users. Management/provides a forum for Unlike retailing, Advertising/exchanging those goods. wholesaling generally does DirectThere are four basic not involve actively Marketing/Salesfunctions of retailing: promoting products, nor Promotion/(1) Buying and storing does it involve establishing Marketgoods; the wholesale outlet in a Research/Public(2) Transferring title location convenient to or Relations/Sales-of those goods; appealing to buyers. This is Mark N.(3) Providing information because wholesaling entails Clementeon the nature selling products primarily (Americanand uses of those to businesses that come Managementitems; and from a wide geographic Association(4) (In some cases) area and that are generally Publication)extending credit to indifferent to promotionalconsumers trappings-----------------------------------------------------------------------------------15. Defines 'Cash and carry The Marketingwholesaler' as a type of Glossary-Keylimited service wholesaler Terms, Conceptsselling products to and Applicationsretailers, who pay for and in Marketingpick up the product at the Management/wholesaler's location. For Advertising/example, a retailer drives Directto a cash and carry Marketing/Saleswholesaler to buy a set Promotion/quantity of product, paying Marketcash to the merchandise Research/Publicand taking possession of Relations/Sales -the goods. Cash and carry Mark N.wholesalers typically deal Clementein fast moving (e.g. (Americanperishable) products, such Managementas baked goods AssociationPublication)-----------------------------------------------------------------------------------(iv) Based on the above referred expressions of 'wholesale dealer' and 'retail dealer', Sri Narasimhamurthy submitted that a wholesale transaction does not and cannot include a sale in which the goods are sold for own use or consumption by an individual or a business concern;
(v) The said regulations do not define the term 'wholesale' so as to include business to business sales;
(vi) Sri Narasimhamurthy submitted that while interpreting the term 'wholesale dealer', the Court has to evolve, affirm and adopt the principle which will further and not hinder the goals set out in the Directive Principles of State Policy. In support of his submissions, he relied upon the judgment of the Hon'ble Supreme Court in the case of Uttar Pradesh State Electricity Board and Anr. v. Hari Shanker Jain and Ors. AIR 1979 SC 65 : (1978) 4 SCC 16 : 1978-II-LLJ-399 (SC);
(vii) Based on the aforesaid judgment, he submitted that if the term 'wholesale trading' is interpreted to include the sales of goods to business enterprises for their own use or consumption for their business purposes, such an interpretation would not be in consonance with the Directive Principles of State Policy contained in Articles 38(1) and (2) and 39(a) and (c) of the Constitution of India. The said articles are extracted hereinbelow:
38. State to secure a social order for the promotion of welfare of the people.-(1) The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may, a social order in which justice, social, economic and political, shall inform all the institutions of the national life.
(2) The State shall, in particular, strive to minimise the inequalities in income, and endeavour to eliminate inequalities in status, facilities and opportunities, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations.
39. Certain principles of policy to be followed by the State.-The State shall, in particular, direct its policy towards securing.-
(a) that the citizens, men and women equally, have the right to an adequate means of livelihood;
(b) xx xxx
(c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.
(viii) The purchase of goods by the industrial, commercial and institutional concerns or by professionals for its/his/their business purpose, the goods are so purchased in the capacity of a consumer and not of a retailer;
(ix) The first respondent's letter dated 5/10th December, 2002 (Annexure-R5 to the first respondent's statement of objections) clarifying that business to business sales is permissible under the extant policy, which cannot be termed as retail trade, such a definition is not contemplated in either the Policy Statement or 2003 Regulations. He further pointed out that this clarificatory letter runs contrary to the first respondent's statement of objections that there cannot be any sale by the second respondent to direct consumers;
(x) Sri Narasimhamurthy relied on two judgments of the Hon'ble Supreme Court in the case of Anwarkhan Mahboob Company v. State of Bombay and Ors. : [1961]1SCR709 and in the case of State of Karnataka v. B. Raghurama Shetty : [1981]3SCR280 , which throw light on the term 'consumption'; on its basis 'consumer' is to be understood in the Indian context. Sri Narasimhamurthy summed up his submission stating that viewed from any perspective, either under the Policy Statement or under 2003 Regulations, business to business activities of the second respondent is not permissible; they amount to retail trading, which is specifically prohibited under the Policy Statement and the Regulations, 2003.
7. Sri G.E. Vahanvati, the learned Solicitor General of India appearing for the first respondent submitted that giving the restricted interpretation to the meaning and scope of 'wholesale cash and carry trading' would be against the very purpose of the policy relating to FDI. Highlighting the benefits of FDI, he brought to my notice the foreword to the document containing the latest FDI Policy - April 2006. The same reads as hereunder:
Foreign Direct Investment (FDI) plays an important role in the long term economic development of a country not only as a source of capital but also for enhancing the competitiveness of the domestic economy through transfer of technology, strengthening infrastructure, raising productivity and generating new employment opportunities. FDI also has an important role in enhancing exports. We in India see FDI as a developmental tool.
The policy of the Government of India is to strive to maximise the developmental impact and the spin offs of FDI. While Government encourages, and indeed welcomes FDI in all sectors where it is permitted, we are especially looking for large FDI inflows in the development of infrastructure, technological upgradation of the Indian Industry through green field investment in manufacturing and in projects having the potential for creating employment opportunities on a large scale....
India has been consistently classified as amongst the most attractive investment destinations by a slew of reputed international rating organisations.... .
8. He also brought to my notice the definitions of 'wholesale trade' and 'retail trade' as given by the World Trade Organisation. The same read as follows.-
Wholesaling consists of the sale of goods/merchandise to retailers, industrial, commercial, institutional or other professional business users or other wholesalers and related subordinated services.
Retailing services consists of the sale of goods/merchandise for personal or household consumption either from a fixed location (e.g. store, kiosk etc.) or away from a fixed location and related subordinate services.
He submitted that the Government cannot be precluded from accepting the international definition of 'wholesale trade', as laid down by the World Trade Organisation.
9. Sri Vahanvati submitted that one has to look at the issue from the point of view of an international investor as well to the wholesale cash and carry trade. Such an investor would approach the concept of this business from the point of view of what is internationally accepted.
10. Sri Vahanvati submitted that the executive is the best Judge; the Courts do not interfere with the economic decision making. In this regard he relied on a judgment of the Hon'ble Supreme Court in the case of BALCO Employees Union (Registered) v. Union of India and Ors. : (2002)ILLJ550SC . The relevant paragraph of the said judgment is extracted hereinbelow.-
36. In State of Madhya Pradesh v. Nandlal Jaiswal : [1987]1SCR1 , the change of the policy decision taken by the State of Madhya Pradesh to grant licence for construction of distilleries for manufacture and supply of country liquor to existing contractors was challenged. Dealing with the power of the Court in considering the validity of policy decision relating to economic matters, it was observed at pp. 605 and 606 as follows.-
34. But, while considering the applicability of Article 14 in such a case, we must bear in mind that, having regard to the nature of the trade or business, the Court would be slow to interfere with the policy laid down by the State Government for grant of licences for manufacture and sale of liquor. The Court would, in view of the inherently pernicious nature of the commodity allow large measure of latitude to the State Government in determining its policy of regulating, manufacture and trade in liquor. Moreover, the grant of licences for manufacture and sale of liquor would essentially be a matter of economic policy where the Court would hesitate to intervene and strike down what the State Government has done, unless it appears to be plainly arbitrary, irrational or mala fide. We had occasion to consider the scope of interference by the Court under Article 14 while dealing with laws relating to economic activities in R.K. Garg v. Union of India AIR 1981 SC 2138. We pointed out in that case that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. We observed that the Legislature should be allowed some play in the joints because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait-jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the Legislature. We quoted with approval the following admonition given by Frankfurter, J. in Morey v. Doud (1957)354 US 457:
In the utilities, tax and economic regulation cases, there are goods reasons for judicial self-restraint if not judicial deference to legislative judgment. The Legislature after all has the affirmative responsibility. The Courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the Judges have been overruled by events - self-limitation can be seen to be the path to judicial wisdom and institutional prestige and stability.What we said in that case in regard to legislation relating to economic matters must apply equally in regard to executive action in the field of economic activities, though the executive decision may not be placed on as high a pedestal as legislative judgment insofar as judicial defence is concerned. We must not forget that in complex economic matters every decision is necessarily empiric and it is based on experimentation or what one may call 'trial and error method' and, therefore, its validity cannot be tested on any rigid 'a priori' considerations or on the application of any strait-jacket formula. The Court must while adjudging the constitutional validity of an executive decision relating to economic matters grant a certain measure of freedom or 'play in the joints' to the executive. 'The problem of Government' as pointed out by the Supreme Court of the United States in Metropolis Theatre Company v. State of Chicago (1912)57 Law Ed 730:
are practical ones and may justify, if they do not require, rough accommodations, illogical, it may be, and unscientific. But even such criticism should not be hastily expressed. What is best is not discernible, the wisdom of any choice may be disputed or condemned. Mere errors of Government are not subject to our judicial review. It is only its palpably arbitrary exercises which can be declared void.The Government, as was said in Permian Basin Area Rate cases, (1968)20 Law Ed 2d 312 is entitled to make pragmatic adjustments which may be called for by particular circumstances. The Court cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. The Court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide. It is against the background of these observations and keeping them in mind that we must now proceed to deal with the contention of the petitioners based on Article 14 of the Constitution.
11. Nextly the Solicitor General submitted that the Government being the author of the policy, has every right to remove any ambiguity about the policy. He defended issuance of the clarificatory letter dated 5/10th December, 2002 by citing the judgment of the Hon'ble Supreme Court in the case of Ajeet Singh Singhvi v. State of Rajasthan 1991 Supp. (1) SCC 343 : 1991 SCC(L and S) 1026. The relevant portion of the said judgment is extracted hereinbelow:
12. .. The view of the Government in maintaining that the super time scale posts are highest posts is not only a bare and literal interpretation given by it to the Rules but also is reflective of its policy in this regard and no decision needs to be given by the Court in normal circumstances to amend or alter such policy. In such a realm even contemporaneous exposition of a similar rule in another set of rules cannot play their part to influence either the Court or the Government to give the same interpretation or exposition to the Rules requiring interpretation herein. Besides the Government being the author of the rule, has kept to itself, as a matter of prudence, the right to remove any ambiguity about the identification of any post including the highest post/posts. The stance of the Government in this regard should have clinched the matter but since the same had been put forth as a defence in the High Court, its view nonetheless is entitled to great weight and the burden of the appellants to lift that weight, an uphill task by all means, has remained unfulfilled.
12. He submits that the petitioners' prayer for a direction to the first respondent to hold an enquiry into the trading activities of the second respondent has become infructuous. The first respondent has already conducted a full and comprehensive inquiry and has found substantial compliance with the conditions of approval. Over and above, the inquiry report has recommended additional restrictions on the second respondent. He further submits that from July 2004 there has been no significant complaints of misuse of approval by the respondent 2.
13. Sri Soli J. Sorabjee, the learned Senior Counsel appearing for Sri Vivek Chandy for the second respondent submitted that the meaning and expression 'cash and carry wholesale trading' has to be based on international commercial understanding. He brought to my notice the definition of cash and carry wholesale trading' of Statistical Office of the European Communities (Eurostat), which is as follows.-. the only decisive characteristic of wholesale is whether the offer is made to business/professionals or to private consumers. A trade between a wholesale warehouse and business/professional customers (retailers, professional users, caterers, institutional buyers, etc.) constitutes a wholesale trade irrespective of the quantity, package size or value of goods sold.
14. Sri Sorabjee also relied upon the World Trade Organisation definitions of 'wholesale trading' and the 'retail trading', as was done by Sri Vahanvati.
15. The Encyclopaedia Social Sciences, Volume 3, page 246 states as follows.-
The distinguishing feature of the retail trade...consists in selling merchandise to ultimate consumers' whereas wholesaling is said to cover sales 'to a retailer, a wholesaler, or an industrial consumer so long as the purpose of the customer in buying such goods is to resell them in one form or another or to use them for business needs as supplies or equipment.
16. Going by the afore-extracted definitions, the second respondent's activities fall under the definition of the 'cash and carry wholesale trading.
17. Sri Sorabjee submits that the cash and carry wholesale trading is an international concept and therefore it is impermissible to borrow the meaning of 'wholesale trade' from the domestic statutes.
18. He submits that the respondent 2 has brought about FDI and State of the Art Technology. It has generated local employment, has made the goods available at attractive prices and thus has brought benefit to the public at large.
19. He submitted that 'challenge to executive action in the field of economic activities' is impermissible. The petitioners have not challenged the policy of Government to permit hundred per cent FDI. Knowing fully well that the policy of the Government cannot be assailed under Article 226 of the Constitution of India, they have impugned only the permission granted to the respondent 2. The allegations that the multi-national companies are flooding this country and causing (sic)ment to the local people, would have assumed relevance only if they have (sic)nged the policy of the Government. What the petitioners are not permitted to do directly cannot be permitted to be done indirectly.
20. He relied upon the judgment of the Hon'ble Supreme Court in the case of BALCO to buttress his submission that the Court cannot examine the relative merits of different economic policies and cannot strike down a policy merely on the ground that another policy would have been fairer and better:
46. It is evident from the above that it is neither within the domain of the Courts nor the scope of the judicial review to embark upon an enquiry as to whether a particular public policy is wise or whether better public policy can be evolved. Nor are our Courts inclined to strike down a policy at the behest of a petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical.
21. Sri Sorabjee also brought to my notice the order, dated 22nd November, 2004 passed by the Delhi High Court in Writ Petition Nos. 9568 to 9570 of 2003 in the case of Federation of Associations of Maharashtra, and Ors. v. Union of India and Ors., wherein it is held that it is for the Government and not for the Courts to interpret the term 'wholesale sale'. The relevant paragraphs of the said judgment are extracted hereinbelow;
57. The matter in issue is not even of any statutory interpretation, but of the policy. The policy-framer is the concerned Ministry which itself has issued the clarification/modification. The learned Additional Solicitor General is right in his submissions that the matter is one of policy decision and allocation of businesses and FIPB functions as part of the concerned Ministry. It is the said concerned Ministry which has issued the clarification and, thus, the aspect is one of the internal functioning of the Government. The final decision has been communicated after due deliberations.
58. The complete emphasis of learned Senior Counsel for the petitioners was that the GOI was wrongly interpreting the terminology of 'cash and carry wholesale trade'. The question which, thus, arises is how is this term to be interpreted and by whom? The relevant authority is the Government itself which had framed the policy. It is for the Government to interpret the terminology in question. It has so interpreted the terminology, which facilitates what the private respondents are doing. The petitioners can hardly have a complaint about the same.
59. The interpretation of the Government is also not out of thin hair. It is trite to say that with the expansion of international commerce and trade, there are certain internationally understood concepts, which have come into play. Is the Court to look to the traditional definition of what may be wholesale or retail as may be considered in the dictionaries and in the country earlier or is the Court to accept the definition adopted by the Government on international practice? The Government's view is based on the WTO definition of wholesale trade. The Government can hardly be faulted on this account and it is not for the Court to go into this question.
22. The submissions of the learned Counsel have received my anxious consideration. I am in respectful agreement with the considered view expressed by the Delhi High Court in the matter. The task of defining the term 'cash and carry wholesale trade' is to be best left to the Government, which has formulated the policy of inviting the FDI. No directions can be given to the Government to accept a particular definition of the term 'cash and carry wholesale trade' in preference to or to the exclusion of its other definitions from other sources. Therefore the challenge to the approval order, dated 5th December, 2000 (Annexure-B) fails. Similarly the first respondent cannot be held to be at fault for issuing the, clarificatory letter dated 5/10th December, 2002 (Annexure-R2 to the second respondent's statement of objections). The Hon'ble Supreme Court in the case of Ajeet Singh Singhvi, has held that the Government being the author of the rule, has the right to remove any ambiguity in the matter.
23. Nothing survives for any consideration of the petitioners' alternative prayer for a direction to the respondent 1 to hold the proper enquiry into the trading activities of the respondent 2. An enquiry into the operations of the respondent 2 is already held and the report, along with a brief assessment of the first respondent on the findings of the enquiry committee, are already placed on the record of this Court.
24. The contention advanced on behalf of the petitioners that the expanded definition of the term 'wholesale trading' is not in consonance with the directive principles of the State Policy contained in Articles 38(1) and (2) and 39(a) and (c) of the Constitution of India and that therefore the respondent 2 is to be restrained from carrying out its commercial activities amounting to retail sale, cannot be accepted in view of the considered view of the Hon'ble Supreme Court in the case of Ashoka Smokeless Coal Ind. (Private) Limited and Ors. v. Union of India and Ors. : (2007)2SCC640 . The relevant portion of the said judgment is extracted hereinbelow:
106. It may not be correct to say that any action which is not in consonance with the provisions of Part IV of the Constitution would be ultra vires but there cannot be any doubt whatsoever that the principles contained therein would form a relevant consideration for determining a question in regard to price fixation of an essential commodity. Directive principles of State Policy provide for a guidance to interpretation of fundamental rights of a citizen as also the statutory rights.
25. It is a matter of serious concern that the petitioners and similarly placed reliance are suffering on account of the Government's policy to invite FDI. But it is for the Government to evolve a policy to safeguard the interest of the retailers. It is trite position in law that the Court should not substitute its wisdom for the wisdom of the Government in policy matters.
26. The opening of the gate should not result in bringing prosperity to the few and deprivation to many. Few pertinent questions could be: What has been happening to poverty? What has been happening to employment? What has been happening to inequality? If all three of these have become less severe, then beyond doubt there has been a period of development in the country. If one or two of these central problems have been growing worse, especially if all three have, it would be strange to call the result development even if per capita income has soared. The policy has to bring about the greatest happiness of the greatest number. The greatness of the policy maker is in not falling, but in rising every time it falls. That is why in BALCO's case, the Apex Court has held that the Government has, while taking a policy decision relating to economic issues, right to 'trial and error'.
27. In the result, I dispose off this petition with the following order.-